igggy

Airlines Hit Hard by Bevy of Factors

At some point I looked at monthly performance of airline stocks and CAL on average goes up some 7% in October. Could be data mining but other airlines perform well in October too.
To the author: who said 'investors' own airline stocks? Maybe as a bet against oil. I'd rather own refiners for that.

Why Airline Stocks Are So Often Bad Investments

I am surprised no one mentioned the difference between LUV (and a couple of other successful lower-cost carriers) and the legacy airlines. Part of the problem is that at the legacy airlines both the management and the unionized employees treat their company as a cash cow rarely thinking about the future.

One example,:UAUA will likely file for bankruptcy again in the next couple of years. They've been there twice already after 9/11 and with the current management they are likely to go that route again. Unfortunately, airlines in bankruptcies seem to keep flying as if nothing happened (who gave Frontier their money and why?) which puts more pressure on the surviving carriers. Even LUV might feel more pressure soon. They are famous for never laying off a single employee which could be a problem if travel demand falls off a cliff.

Of course, if oil drops below say, $70 airline stocks might be the trade of the year but I wouldn't bet on that.

When Crude Drops, AMR Will Fly

Hah! I bet all those rallies are due to short covering. Been there myself.
AMR is in a more difficult position than the others because they didn't go Ch11 after 9/11 and are still carrying the old debt. On top of that, they wont' be able to get any more concessions from the unions this time. So unless the author is talking about a short term trade, I wouldn't bet my
money on AMR.

The entire airline industry is a big mess perhaps with the exception of LUV. Interestingly, if oil drops too much LUV will be the one in trouble because of too much hedging and higher labor costs .